The IRR Is the Discount Rate That Produces a Zero

question 18

Multiple Choice

The IRR is the discount rate that produces a zero NPV or the specific discount rate at which the present value of the cost equals ________.

• A)the future value of the present cash outflows
• B)the present value of the future benefits or cash inflows
• C)the present value of the cash outflow
• D)the investment

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.

Incentive to Change

A factor or set of factors that motivates individuals or entities to alter their behavior or decision-making.

Equitable

Fair or impartial in treatment or judgment without bias or favoritism.

Efficient

When resources are used in a way that maximizes the production of goods and services without wasting any resources.